Sanoma Oyj (SANOMA) Earnings Call Transcript & Summary

[Interpreted] Distinguish shareholders, I'd like to warmly welcome you to the Annual General Meeting 2023 of Sanoma here at the Mediatori of Sanomatalo where we first time are holding our general meeting. It is also possible to follow this meeting as a webcast on Sanoma's website. To start with I will introduce the Sanoma's Board of Directors. In 2022 after the general meeting, the Board has included Vice Chairman, Nils Ittonen who unfortunately today is not able to participate and Board members, Julian Drinkall; Rolf Grisebach; Anna Herlin; Mika Ihamuotila; Denise Koopmans; Sebastian Langenskiöld and Rafaela Seppälä. I'm Pekka Ala-Pietila, Chairman of the Board of Directors. According to the Articles of Association, the Board of Directors is always elected for one year at a time. The proposal for the composition of the Board for the first time has been made by the Shareholders' Nomination Committee, and it was established by the decision of the previous Annual General Meeting. The committee has prepared a proposal for the number, composition and remuneration of the Board members that's presented to the general meeting. Amongst the current members of the Board, Rafaela Seppälä has announced that she is not available for the position to be reelected. In her place on the Board, the Nomination Committee, proposes Eugenie van Wiechen and she will later during this meeting introduce herself with a video greeting. Further, the Shareholders' Nomination Committee has proposed Pekka Ala-Pietila elected as Chairman of the Board and Nils Ittonen as Vice Chairman. The term of office of the Board members ends at the end of the 2024 Annual General Meeting. I would like to warmly thank Rafaela Seppälä for her long-term and valuable contribution in the Board of Sanoma as a member. Rafaela, you have a very wide vision both in terms of time, but also with regards to the themes? And you've also been deeply concerned about the future of the Finnish media from your heart, and you are really interested in the opportunities arising in our era. So we have considered you as a very important part of our collective competence and also the way we think. I'd like to thank you on behalf of the whole Board of Directors. Sanoma is Europe's leading provider of printed and digital learning solutions for primary and secondary schools. And it is a leading multichannel consumer media company in Finland. In 2022, in line with our strategy, we took new steps and we expanded our learning business, acquiring a company in Italy. Now we operate in 12 European countries where 25 million students and pupils use our learning solutions. In Finland, our media offers consumers information, experience and entertainment and solutions for advertisers, reaching almost all Fins every day. Sanoma has made progress systematically in the digital transformation, both in use production and in the consumer offering of our magazines and entertainment services. And today, all subscriptions to Helsingin Sanomat also include the magazine's digital content. Sanoma's other newspapers benefit from these digital solutions that are developed by Helsingin Sanomat, and they can use them to offer their own customers products that match their preferences. This has led to a strong digital order growth, which is around 5% in annual terms -- almost 190 million articles are read weekly from the online service of Ilta-Sanomat. And there is a weekly number of approximately 3 million readers that use it. Digitalization makes it possible to fulfill increasingly individual consumer wishes. Also, in our television services, and that is why Nelonen Media with its streaming service [ rotor ], the SVOD and its subscriber numbers have developed favorably. In 2023, we'll continue to map and utilize new growth opportunities in the business areas of learning and media. We can see opportunities for growth in -- both in our current operating countries and in new markets for our learning business. Our goal is to further expand, in particular, in the area of learning business, both organically and also through carefully selected acquisitions. And in accordance with our published growth strategy, the turnover target of Sanoma by 2030 is EUR 2 billion, of which 75% would come from our learning business. This would mean to double the size of our learning business from to date. Sanoma has a strong expertise in digitally advanced learning markets, and we are able to utilize it in our other markets, too. In the future with the help of technology, we are able to increase opportunities for personal learning parts and to enrich news production and expand the way news are -- is followed. At the same time, as we grow our business in a stable and responsible manner, we are committed to paying an incentive dividend for investing in Sanoma shares. The free cash flow of Sanoma decreased in 2022, significantly in particular, due to our increased investments in learning materials, in the harmonization of digital learning platforms, in the integration of our recent acquisitions and in the conversion of our office spaces to meet the requirements of hybrid work. These investments will bring us benefits and growth in future. Due to the lower cash flow, the Board of Directors proposes to reduce the dividend to EUR 0.37 per share, which corresponds to 93% of the adjusted free cash flow of 2022. The proposed dividend correspond to a dividend yield of approximately 4%, as calculated at the 2022 closing price of the Sanoma share. The proposal -- on the one hand, balance is the use of Sanoma's Capital between the payment of dividends and the other continuous investments to grow the business. The Board considers that this way the company has the best conditions to return to the career of growing dividends in future. Sanoma has made determined progress in its responsibility work. We continue our work ambitiously. And our goal is, for example, to achieve carbon neutrality in our entire value chain by 2030. At the end of '22 and the beginning of 2023, two additives of Sanoma newspapers, both Helsingin Sanomat and [indiscernible] have left their positions at their own requests. The events that led to the termination of employment were unfortunate and they were not related. The Chairman of the Personal Committee, Julian Drinkall will later present the remuneration report during this meeting, which also includes the main points of the remuneration of President and CEO. And finally, dear shareholders, I'd like to thank you, first and foremost, also the staff of all countries and our CEO, Susan Duinhoven for her commitment and the work she has done over the year 2022 facing the unprecedented changes, and we've been able to meet the challenges and been able to continue serving our clients and also developing our business according to our strategy. So dear shareholders, I'd like to thank you for your support and your confidence in the past year. And I'd like to wish you all a fruitful and interesting Annual General Meeting. And next, we are to elect the Chairman. I suggest Riikka Rannikko for this position.

Good afternoon, distinguished shareholders of Sanoma. My name is Riikka Rannikko. I'd like to thank you for your confidence and wish you all warmly welcome to this Annual General Meeting of Sanoma. It must be now 4 years ago when with most of you, we have met -- so here live today. I'd also like to wish welcome those who are following the meeting online. I'd like to invite lawyer [indiscernible] to keep the minutes of this Annual General Meeting. And I'd like to note that here in the front, together with myself, we have President and CEO, Susan Duinhoven ready for the review of the financial year. Some practical matters before we go into the agenda items proper. So it is possible to follow the meeting online via the website of the company. And this attendance online is not considered as official participation to the meeting. There is a chat function available during the CEO's review, so we can take questions. But those questions are not considered as an official part of questions of the Annual General Meeting according to the company's act, and they're also being moderated. So next, we'll also see the results of advanced voting. We have received numerous votes. So shareholders have been able to use their right of voting also in advance. And the decisions that were voted on are considered as unchanged with the results we have received in this Annual General Meeting and also the nominee registered shareholders have all participated into this advanced voting procedure on behalf of the shareholders they represent. And should we not proceed into a full counting of votes, we will record at each agenda item, both the opposing votes and also abstentions. And if there have been opposing votes under such agenda items that cannot be opposed when there are no counter proposals made so they're not being recorded to the minutes. Should we proceed into a full counting -- full vote counting procedure, then of course, the advanced cast votes will also be added to the results, and that will be annexed to the minutes. Based on that, we have had plenty of advanced votes cast and the results look quite clear. In this meeting, we have participants and speakers. We will photograph them, but that is not a targeted photography. The meeting will be recorded for the use of the company and the review of the President and CEO also will be later available on the company website. Questions and comments are very welcome in this meeting. And should you like to take the floor, please present yourself, give your name, perhaps the name of the shareholder that you represent, the number of your voting ticket. And please also wait for the microphone before you start to speak. The venue comprises the media square of Sanomatalo, a great venue, feels a bit like as we had been invited home to Sanoma. And if you have to leave during the meeting, I'd like to ask you to leave your voting tickets to the officials, so we can keep the list of votes updated during the entire meeting. This meeting also has the whole Board of Directors represented apart from [ Eugenie van Wiechen ] not the new member candidate either, but she will give a video presentation later during this meeting. Further, we have also people who have the legal right to attend as well as officials, the staff and management of Sanoma and the representatives of the media. And as said, those who follow online can be also joining us. At this point, I'd like to you to check that you have muted your mobile phones and the meeting agenda will be handled in Finnish, but each shareholder is able to use either Swedish or English when they speak. The [ view ] of President and CEO and the presentations of the chairs of the Audit Committee and Personal Committee will be presented in English. They will be interpreted into Finnish and headphones have been available at the entrance. If you still need headphones, please raise your hands now. Could I get one set to the front? And you'll be getting your headphones. And should we take a vote, we'd use the voting cards and we'll give specific instructions before voting. An agenda will set forth the order of things, how we handle them, unless other things decide otherwise. Item 3, election of persons to scrutinize the minutes and to supervise the counting of votes. Traditionally, we have elected two persons who usually have taken the task of both positions. And I have heard before that [indiscernible] would be available for the tasks. Are you present? Are you available? Both are not in their heads, so I guess that suits the meeting. So that is how we elect them to scrutinize the minutes and to supervise the counting of votes. Item 4, recording the legality and quorum of the meeting. According to the Article 11 of Articles of Association and the Company's Act stipulate how we proceed. So the notice will have been published at least in one newspaper and no earlier than 3 months before the record date as specified in the company's act no later than 3 weeks before the Annual General Meeting. And it has been published as an announcement on the 10th of February 2023 and in the newspaper of 11th of February 2023. So we consider that the meeting has been legally [ convened ] and it constitutes a quorum, and this will be appended to the minutes, and we go to the item 5. Let's record the attendance and adopt a list of votes. We had the deadline to register to this meeting or to vote in advance by a certain [ deadline ] and we have a total of 332 shareholders, either having voted in advance or at the venue in person or represented by the legal or proxy representative. And we have 122,806,605 shares and votes represented, which is [ 75.08% ] of all shares and votes. So we have a good amount of votes presented here. Innovatix [ Oy ] has drawn a list of registered shareholders based on the information provided. No technical or other problems related to advanced voting have been made known to the company. Therefore, the right and correct counting of votes have been established reliably. Should there be any changes to the list of votes, we'll update it and we confirm the list of votes now and annexed it to the minutes. Now to the agenda item 6, presentation of the financial statements, the Board of Directors' report and the auditor's report for the year 2022. The documents have been presented in the financial statements and the annual report and published on the sixth of March 2022, a copy has been sent to shareholders if they request it and the original documents are available here, the auditor's report starts on the Page 212 of the financial statements, documents will be annexed to the minutes. And before we continue the formal handling of the agenda item will get the moment that everybody is expecting. We'll give the floor to the President and CEO, Susan Duinhoven to give her review of the business of the company in 2022 in English and that will be interpreted into Finnish and you can ask questions. Both after the view here live, but also during the review, you can also use the chat function to comment and ask questions. So that is to increase interactivity. It is a moderated chat, not part of the official Annual General Meeting.

I'll review the events and performance of the financial year 2022. Ms. Duinhoven, welcome.

Thank you very much, Madam Chair. Warm welcome also from my end to this Annual General Meeting. Very good to be altogether again in 1 room and be able to go through the year face to face. And 2022 was quite a year, and we managed to continue to grow the business, but it was unavoidable that the challenging economic climate also impacted our overall results. But before I go into those details, let me first, after a couple of years of not having seen each other face-to-face, let me summarize what the company currently looks like because we have grown, and we have grown in our learning business. We have now together are the leading #1 player in the European K-12 learning market. Let me explain K-12 is primary and secondary education. So it stands for the first 12 years of formal education. In Finland, you know us well as the #1 cross-media company with a reach of basically all Finns on a weekly basis, combination of journalism and entertainment in a very successful digital transformation. And then Sanoma as a stock is still what you have always seen a very sustainable business. Sustainability is to the core of our business, both the learning and the media business contribute positively to society. Last year, we also made clear what our long-term target is, and we want to continue to grow. We want to grow in our learning business and as a total group, want to be over EUR 2 billion in sales by 2030, of which then 75% of that business will be learning, will be education business. And that basically means that we aim in those years till 2030 to double the size of our education business. And if we put that in numbers, then you see that the company currently stands sort of 50-50 between media business and learning business when you look at it from a revenue perspective. So EUR 1.3 billion in total, 53% is learning. But if you then look at the profitability, you already see that close to 75% of the operational EBIT, excluding PPA, is coming from our learning business. So we can truly say that we have now predominantly grown into an educational business. And we're very digital. Over 85% of our users pay for digital services. Last year, cash flow of EUR 112 million and in total as a company, 5,600 employees. So that's what Sanoma stands for nowadays. And when preparing for this AGM, we came up with 3 points that we, as a team, are very proud to share with you over 2022. And the first 1 is very much connected to the learning business. We managed in the year '22. We managed to continue to grow our position as a global leader in K-12 education. We acquired Italian and German business from Pearson. And those businesses, even though acquired at the end of August, already contributed positively to 2022. And brought, in total, the learning share of group sales to 53%. And the EBIT, excluding PPA, to 73%. But also in Spain, our previous acquisition, we made good progress. We benefited from the curriculum change that was happening there in '22, starting -- and we finalized our integration, which was quite a project because if you think that the acquisition was done at the end of 2020. And by the mid of 2022, we were fully integrated with the Spanish business. And those two acquisitions also show our long-term perspective and our long-term operational benefits that we can get from the increased scale and the increased harmonization of our digital platforms, but let me go into a bit more detail on this Italian business that we acquired last year. Italy is one of the largest European K-12 market. In Italy, we're then now the #3 player with 15% market share. The Italian market is quite a stable educational market, both in number of students, but also in its government's spending on education. And given the fact that Italy is still at the starting point of the digitalization, it gives us a lot of opportunity to utilize our top-notch digital platforms and digital applications in that Italian market. And that is exactly why we're so keen on being early into these developing education markets, when the development of digital is still at its starting point. Now a very specific point on the Italian market. Very interesting element is that 80% of our sales in Italy is coming from secondary education. And that is not common across our portfolio, we're typically a bit stronger in primary education. And that is why Italy made a lot of sense for us to acquire because this gives us scale in secondary education. And that scale is then also helpful when we announced the deal, we also announced that we would be doing EUR 10 million investment in digital platforms, specifically for secondary education. And that development can then not only be used in Italy, but also elsewhere in the group, where we otherwise would not have had the scale to make those investments to be also excellent in secondary education. But who better to talk about the Italian business, then Mario Mariani, who is the CEO of that Italian business, and he's joining us on video.

Good morning, Mario, and thank you for being with us today. I will ask you a few questions for better understanding the situation of the business in Italy. Could you please describe the education market.

The Italian education market is one of the largest in Europe with an estimated value of over EUR 750 million in 2021. We are talking about a learning journey of 13 years, made up of 5 years of primary free of lower secondary and 5 of upper secondary school. Almost all of the school are public and the Scholastic program is national. The 5 years of primary are paid by the state with a voucher being provided to families for the free acquisition of the books, while families buy the books for secondary school. State assistant is available for low-income families. In 2020 through EUR 133 million was provided for this. Paper books must be published along with the digital version and digital materials that are directly related to the textbooks. At the moment, use of digital material is still at a low percentage. However, it has grown in recent years. Textbook selection is carried out by the individual teachers by law, and the choices can be taken for the [indiscernible] reason each year and are not restricted by [indiscernible] changes. It's therefore important that editors have a constant renewal of content to remain competitive in the market.

What is your position in the market? And what is your offering.

Sanoma Italy is in third place in terms of revenues in the fragmented Italian education market with a 15% of share. The focus of activities is on secondary education with around 80% of revenues coming from this market. Sanoma Italy operates in the market with a series of historical brands that have an extremely long presence. For example, the [ Paravia ] brand is more than 200 years old. There are many other areas of excellence, especially in the humanities but not only. And this is proven by market share, for example, 70% in philosophy, 50% in Italian [ literature ], 30% in French.

Thank you for your insight. And still focusing on the company will just become part of Sanoma. How is the interpretation process going on?

The Italian team is very happy and enthusiastic about joining the Sanoma world. We can see many common points in the business culture and significant alignment between the activities of the Italian business and the main activities of Sanoma Learning. Our Sanoma colleagues have warmly welcomed us and the availability shown regarding collaboration has been exceptional and very motivating for us. The integration into Sanoma has begun well. There is a structural framework and we are in line with all of the main activities. The rebranding from Pearson to Sanoma has started, and we are building synergies with Sanoma procurement, which will allow us to have benefits from 2023 already.

Thank you, Mario. Thank you so much for your time.

Thank you to you.

That was Mario talking on the Italian business. Let me then go to Spain, which was our previous acquisition. And in 2022, we benefited in Spain from the educational reform. When we acquired Santillana at the end of 2020, we became in Spain, the leader in K-12 education with about 20% market share. As I said, the integration was finalized in 2022 fully and quite successfully. So the synergies were achieved and the company is fully functioning as a Sanoma learning entity. In Spain, our position is particularly strong in primary education. So it's, in that sense, quite complementary to the Italian case. The [ LOMLOE ] the educational reform in Spain is increasing the demand not only in 2022, but also in '23 and '24. But to be totally fair when we started 2022 we had an expectation that more of the curriculum reform would actually be taking place already in 2022 itself. We saw, however, that in the Spanish market, between the 17 different provinces, the implementation of that reform was taken more on a province-by-province lever and subject by subject. So therefore, instead of doing it all in one year, it is coming now in '22, but also '23 and even a bit in '24. Also in Spain, we benefit from the early stage of digitalization. So we see that our digital platforms has still room to be introduced and grown. And that is what we have done in '22 with the curriculum reform. Also these new platforms have been introduced. And that, I think, is the underlying story under our international expansion. When we look, we see that the logic for us gaining scale is the fact that we have strong digital platforms and strong experience in introducing them in the education market. And that is logical because we are coming traditionally out of highly digitalized countries like Finland, Sweden, Belgium, the Netherlands and now rolling out into markets that are more at the starting point of digitalization, we can use those experiences and assets. And digitalization in education is making quite some steps, of course, post corona, but also given the fact that in education, digitalization gives completely new opportunities to actually personalize for example, the learning experience in the classroom. So with those experiences and our best-in-class digital platforms, we can actually improve the learning outcome and therefore, benefit when we roll that out across territories. Now at the same time, you will hear us talk quite a bit about harmonizing our digital platforms, and that is a major area of investment for us. And this is necessary because we have grown through acquisitions. And it means that with every acquisition, you also buy certain new platforms. You get those platforms with the business. And it is essential that we constantly harmonize these platforms in order to make sure that we are very efficient in the development. Now we don't do that by selecting one platform and then rolling it out and forcing it into all the markets. The way we do this is through modular development. So we developed the same modules that we reuse in all the countries, but the user interface stays quite tailored to the local market. But just to get a feel for the enormity of this task, why it is that more than 600 people in our team are working in tech for primary education, where you could think this is quite a standard way of operating in the different educational markets. But our target is to bring that to 15 common modules. And you can imagine the savings that we will get from future developments when that only needs to happen in 15 modules and only once for all the markets. So that is our development in '22 in learning. And we see that as a point of pride of the last year. If we then look at another point of pride and that is our continued successful digitalization in Media Finland. We saw, again, that there was a strong growth in digitally active subscribers, both in Helsingin Sanomat, but also in our regional news media titles. But not only on the journalistic side of the business, do we see digitalization being successful. We also see this in video-on-demand. So on the entertainment side, Ruutu+, despite enormous competition from large American platforms, like Netflix, like Disney, has still been able to grow its subscriber base and now over 300,000 subscribers on Ruutu+, which is quite an achievement. Not only number of subscribers, but also the total number of visits to our digital platforms increases. So specifically, the most growth we saw on Helsingin Sanomat, so [indiscernible], more than 20% growth. So if you look at the whole of Media Finland, you already see that 60% of users pay for a digital component out of 1.4 million subscribers that we have. So quite a sizable and successful digitalization. But I would like to highlight now one case and that is Ilta-Sanomat because Ilta-Sanomat as a tabloid, traditionally a B2C product where you buy the newspaper of the news stand has been able in the past years to manage a quite stable revenue by changing its business model slowly but surely from B2C print to B2B so advertising sales in the digital world. And the enormous amount of traffic and page views is supporting the change in business model. The digitalization for Ilta-Sanomat has brought a lot of good because it has increased the reach of its news very considerably. You can really say Ilta-Sanomat reaches the whole of Finland. And these are often audiences that are not particularly prone to subscribe, for example, for news. And this is where we see it as quite essential that Ilta-Sanomat that availability for free with easy access, not only from a user perspective, a user interface perspective, but also from its content and its journalistic style, easy, accessible for everyone. But with that, everyone has access to high-quality curated journalistic news. And in this day and age of fake news and disinformation, we see that as a very essential contribution to society to keep news available and accessible for everyone. Now the business model change is the clever change of selling digital advertising to that large audience. And with that, being able to replace the single copy sales of the news stand. And IS is not yet at the end of its development. It constantly develops further. And you see that with this growing tool set, they also can personalize more and more driven by usage growth, but also with careful consideration of audiences to make sure that they target also audiences that might not typically or historically not been so strong, like young people or women. So IS has been quite innovative in its use of media types in audio, in video, but also in extending its content. And just one example out of that, when we started a number of years ago with launching [indiscernible] content on the Ilta-Sanomat platform, you have seen in that period a doubling of the reach of those articles. So using that massive platform and that high-frequency visits on the IS platform, [indiscernible] content also got more exposure to a broader audience. So it's those type of innovations that keep news, attractive, accessible and growing. But who better to explain that, then Johanna Lahti Editor-In-Chief of Ilta-Sanomat. So Johanna will join us on video as well. [Presentation]

I think that is well said, high-quality journalism is key to both the IS and the HS developments and the digitalization. So leaving at the depth going then to the third point of price and that is our performance on the sustainability and specifically the sustainability ratings where we improved very significantly during the year. We had ISS, ESG rating going to Prime C+. And the CDP, the global climate rating going to an A-, which is really of top-notch level. The increase and the improvement in the ISS rating also brought us into the Nasdaq Helsinki Sustainability Index at the end of the year. But underneath those indices is, of course, the absolute -- the true performance. And we were very happy with the employee engagement performance last year. Given the fact that it was a difficult year, we saw that we were stable in the engagement index and still very significantly above the European benchmark. So with 7.3, where the 7.1 is the European benchmark. What we've also done is we have translated our climate target to be carbon-neutral by 2030. We have translated that in science-based targets. And those climate targets, the decrease of 4.2% annually is now being validated, and we expect after summer to get an approval back on that, but that was a major effort undertaken by the sustainability team in 2022. Now you know our sustainability strategy, and it's, of course, centered around the core of our business, inclusive learning, sustainable media. With the core of our business, we have a positive contribution to society. But in our sustainability strategy, we have also defined four pillars where we have put last year challenging targets to reach, but let me start with the inclusive learning. For the learning, it's, of course, interesting to put a target on there. And that's quite complex. So what we do is we do an annual teacher survey. And there are 12,000 teachers interviewed across European countries. And in the beginning of this year, they came back with these quite interesting figures that 84% of the teachers indicate that using our methods help them reach the curriculum goals and 74% agrees that using our methods and platforms actually help them be more time efficient. And the time efficiency is quite sizable. So they indicate that between 10 and 15 hours a week are saved by using our methods and platforms. If you then realize that teacher shortage is in most European countries and a key theme in educational industry development, you see how important the contribution our methods and platform deliver to making learning sustainable. If we then look at our Media business, of course, high-quality news, specifically in years such as 2022, with all the events happening in the world that require guidance, but also with our news brands, we add to the sustainability and the awareness of sustainability. HS Ymparisto, the Environmental segment was for the first time in 2022 launched. 1,500 articles, 62 million article views on sustainability-oriented news. But what I also think very important is HS Lasten Uutiset, the kids news. Kids news in order to get them from an early age interested and aware that news is more than what you find on Facebook. That news and quality news is important and adds to their literacy and their media literacy. And therefore, thousands of young leaders have been now using our HS product in schools and at home. So also with our news brands contributing strongly to creating awareness for sustainability issues. Now one of those core pillars that I indicated is valuing people. And a passionate, diverse and dedicated team is, of course, key to our success. In essence, we are a creative industry. We employ 5,600 people across 12 countries. And in the last year, we had to really adapt now also our offices to hybrid working. Post-corona, no longer everyone coming to the office every day. So we had to find ways in order to accommodate in our offices ways to work together and to work in a hybrid way where part of the team is sitting on a different location or at home and part of the team is in the office. That has also led to some investments because many of our offices had to be remodeled at the same time. In '22, we did see quite high turnover in personnel between 16% and 17%, where normally were more around 10%. And that churn in staff has, of course, led to quite some work pressure on everyone who stayed and also on the human resources teams in order to recruit so many new people and integrate them into our teams. But it is something that we have seen across Europe and across all companies post-pandemic. So people who had not moved during the pandemic, then started reconsidering their employment. Now last year, we did not yet see a significant salary increases because when the war started, the salary negotiations had already been done. But that is one of our elements in our financial forecast also for 2023 that, of course, we also do need to cover the increased cost of living for our employees. And therefore, in '23, we will see an increase in salaries. Of course, with higher increases for lower salaried personnel than for higher salaried personnel. Now one of those other pillars of our sustainability strategy is a responsible business practices. And they are a big part of, of course, also being a Nordic listed company that we have a well-formulated code of conduct that outlines our ethical standards, not only for employees, but also for our business partners. And all employees are required to apply that code in everyday work in all the business decisions. And we have an annual training against that code of conduct, of which also, last year, 98% of the employees participated. And we have zero tolerance for misconduct, zero. Now unfortunately, in the last couple of months, we had two quite senior cases where misconduct and unacceptable behavior did occur. These are two very unfortunate and totally separate incidents, but involved two editors in Chief who have been, based on their behavior, resigned immediately from their posts. We see this as extremely unfortunate. And even with this behavior, I do not want to go miss and not thank both employees for the work that they have done during their tenure in the company in improving and digitalization our media types. So I do want to thank them, but indicate also here our apologies for that behavior. And indicates that there is zero tolerance for this type of misbehavior. Based on these two incidents, we have then also increased the internal communication on the code of conduct, related policies, but also the reinforced with the broader community, the tools that are in order to notify broader of undesired behavior. Adapted also the e-learning, so done everything in order to bring this broader in the community, not only on the senior level, but throughout the company. So with that leaving the sustainability, if we then go to what 2022 was as a year, and I think it was a year, for all of us, where we saw something that we had assumed and hoped never to see again in Europe. We saw a war in the Ukraine, and we are shocked and appalled by the invasion of friendly nation by Russia. And we stand very much with the people of the Ukraine. Throughout the year, we have then also supported the relief work in the Ukraine with several initiatives. And in this place, I want to specifically thank our Polish team who have not only done everything to support teachers to accommodate 100,000 Ukrainian children into the Polish educational system, but also, in many cases, have spent their one day a week involuntary work to help Ukrainians integrate into the Polish society. And many of our employees at Nowa Era have also opened their homes and their hearts to their neighbors. So with great thanks from all of us for that. But also in the news media, there was a central role in providing news on the war. And we have put all that war-related news before the payroll. So making sure that everyone can read high-quality analysis and news during the crisis. The impact of the war on our business has changed during the year because if we think about 2022, when we started in January, February, the year looked actually quite optimistic. Before the war, we came out of corona. We had come as Sanoma quite well through the corona crisis. And we saw economy blooming, coming up. And then February 24th happened. Initially, we were thinking we have no exposure to the Ukraine. We have no business in the Ukraine. We have no business in Russia. So we assumed that the direct impact from that war on our business was actually modest. Yes, there were some impacts on some teams and some suppliers, but easily circumvented and turned to European suppliers. But then I think during the summer specifically, we saw that the energy crisis in Central Europe and significantly increasing inflation and interest rates started actually impacting our business in quite a severe way. And that increase in cost, even though our revenues were continuing to grow, the increase in cost has impacted our results. And that's then also the bridge to give you a bit of an overview on our financial results, 2022 and a bit of an outlook towards 2023. If we look at 2022 as said, we saw continued growth. And in that sales growth, large contribution was from the Italian and German acquisition. But if we then look at the EBIT, excluding PPA, you already see a decline, higher operating cost, specifically paper, which increased with EUR 15 million in -- across the two SBUs was partially mitigated by cost management, but not in full. But you also saw the impact on the EBITDA on -- from a different sales mix coming in, in the media business, less advertising, more events and printing services, which are typically lower-margin revenue types. So the result for the period was impacted by this weaker operational results, higher financing costs, higher interest cost and also then combined with the investments that we had committed to at the start of the year because then we had committed to remodel our offices to harmonize our digital platforms and to integrate the businesses. So we had quite some investments on top then of a lower result. So needless to say that when we reported EBIT at 112, a lower result for the period that this is not to our satisfaction. And we have worked very hard in order to keep as much as possible to the financial promises that we had made in the first part of the year when the world still looked optimistic. So we did keep the margin at 14.6%, which was just within the range that we had guided. But it's needless to say that as a team, we will be working very hard to produce better results for you, for the company in the coming years. Challenging economic environment, we will need to take the next steps on that. But let me then give a bit more detail on the two businesses. If we start with the learning business, net sales grew asset through the acquisition second half of the year, 4 months in our result already contributing EUR 37 million. In Learning, we also saw autonomous growth. So we also saw growth in the existing business. That was 1%. And that was coming -- the reason why it was 1% and not like 7% the year before was known beforehand. We knew that Poland was at the end of its curriculum. It had finished the curriculum change the year before. So then typically the market goes down. We saw strong growth in Spain and in the Netherlands. So those two balanced each other out to a large extent. But then when we look at the operational EBIT, we saw that it was stable, so it didn't follow that growth in revenue, even though the Italian business already contributed EUR 5 million. And this was coming from inflationary cost in paper, the price list in a learning business, you can only do once a year, at the start of the year. So we had done that based on very modest inflation in the year before. But then when during the summer, the inflation went very high. We, of course, were not able to reprice in that Learning business. And we know that it will, therefore, take in this mechanism, given the high inflation in many of our territories, it will take 1 or 2 years before we have translated that cost increase into our prices. We know it will come. We have -- are in agreement with governments and schools that we will take that step-wise. But if you see in markets like the Netherlands or Belgium, 12% inflation then it is impossible for a governmental body to accommodate a 12% increase in budget in one year. So they need 2 or 3 years for that. If we then look at Media Finland, their, net sales was stable, which was quite a good result given the year it was, but the earnings were impacted by a different sales mix. So if we look at the sales, we saw that a decline in advertising sales was compensated in part by events and printing services sales, which are lower margin sales, but subscription sales was quite stable. So in the mix, not all negative news subscription stable advertising decreasing and other lower margin increasing. But also there, the higher cost did impact. I said paper cost increases were over 50% in 1 year time. That's hard to cover with price increases. Even though on the media side, of course, the pricing cycle is much more flexible. If we then look at the net debt and leverage that increased, and that was to be expected. The acquisition of the Italian business increased the net debt. The leverage landed on [ 3.2 from 2.4 ] the year before, slightly above our target of being below [ 3 ]. Interest-bearing debt, over EUR 800 million, equity ratio close to 36%, but meaning at the lower end of our long-term target range. The net financial expenses were still very much on an efficient level with EUR 13 million and an average interest rate of 1.5%. But there, of course, we do need to warn that in 2023, with the increasing interest rates, the financial expenses will also increase. But the free cash flow in '22 was already significantly lower. We report EUR 112 million and that is significantly lower from the underlying business, and that was due to the major investments made. And this is a little bit the start of the year where we committed to those investments and then the changing performance during the year that accumulated in this lower cash flow. If we look at the reported cash flow, then you would say how come that, that is still EUR 112 million. But this came as cash with the Italian business due to the moment that we acquired that business, that business had a lot of cash on its balance sheet in order to be able to now go through the cash flow period with that business. In 2023, we expect the underlying cash flow to be stable. But that, of course, means that the reported cash flow will go down given the fact that the Italian business is then more normalized. What we also need to realize is that with an increasing learning business, you do get more swings between the first half of the year and the second half of the year. So the first half of the year takes more and more of cash flow. Now for dividend purposes, we typically adjust the free cash flow for exceptional elements, and there were two exceptional elements. One was the prepayment of what we consider a fully unjustified VAT claim just like we have done before. But at the same time, we subtracted the cash flow that came with the Italian business at the acquisition. And therefore, as you see later on the agenda, the Board proposes a reduced dividend of EUR 0.37. And that compares to the EUR 0.54 last year. That is a total payout of EUR 60 million, and that represents 93% of the free cash flow generated. So that is basically meaning that all the free cash flow generated is handed to the shareholders as dividend. This proposal then balances between dividends and the continuing growth investments in the business. In order to accommodate that increasing swing in working capital. The proposal is to pay the dividend in 3 parts and not in 2 like before. First part, end of April, EUR 0.13. EUR 0.13 in September and then EUR 0.11 in November. And this means that 2/3 of the payment is in the second half of the year when the business is generating all its cash flow. The dividend policy in itself is unchanged. If we then look at 2023 and look what we see coming, then we see in the Learning business, organic growth driven by the new implementation of the [ curriculum in Spain ] continue coming back to growth in Poland and a continued growth in the Netherlands. We see continued integration of the acquisitions, specifically the Italian business is now in the core of its integration work, but we also see increasing cost levels. Still paper cost increases slightly, but now, as I indicated, personnel cost will also increase, and that will take 1 or 2 years to translate into price increases. We will, of course, be extremely careful in our investments, both in content and in the platforms in order to time face the results of the business with the investments in a better way. If we look long-term, we think that this margin pressure is a temporary margin pressure. So in the longer-term, we see the learning business growing with 2% to 5% autonomously and having a margin of over 23%. If we look at the Media business, there we expect that the mild recession that we project for Finland will have impact on the advertising market. And the growth in digital advertising will continue, but the overall quantity of the advertising market will decline. Also, we need to expect a slightly weakening demand on the B2C in the corona period, those two balanced each other out. But now we see that lower consumer confidence also has people think through what subscriptions they want to have, do they want to have them for the full year? So we utilize the price elasticity, but at the same time, we keep making sure that we're not losing subscribers for price increases that would be too high. So we are balancing the building -- continuous building of the platform with the revenues. But also in Finland, in the Media business, we see that our long-term perspectives are unchanged. Media business typically is a business that fluctuates. If we then look at the outlook '23, we expect as a group to be reporting revenues between EUR 1.35 billion and EUR 1.4 billion. And then EBIT, excluding PPA, between EUR 150 million and EUR 180 million. And that is a wider range given the uncertainties in the economic environment, specifically in our Media business. Underlying this forecast is an operating environment that we expect that in all of the economies in which the group is operating both on the learning side and in Finland with the media side, we will experience a mild recession. But specifically that the media advertising market in Finland will decline slightly and that the decline will be stronger in the first half of the year than in the second half. Now in 2023, we started the year, and there is one significant event where we issued a EUR 150 million hybrid bond in March. And we consider that bond to be the best way to strengthen the balance sheet, increase our financial stability and support the execution of our strategic plan, most prominently support potential smaller acquisitions in the markets in which we operate. We also need to realize, as said before, that growing a learning business does put more pressure on our balance sheet in the start of the year and that the cyclicality within the year is getting stronger. Our long-term financial targets unchanged. We have clarified sustainability targets, as you see in this slide. But an important financial target of the leverage being below [ 3 ] in the long-term. And if you take our sustainability target, as said the annual emissions reduction of 4.2% in line with the science-based targets. Now with that, I would like to conclude with the slide with which I started and say, if you now look at Sanoma, 2022 a year with certain elements of price being able to continue our strategy and growth even in a challenging economic environment as the #1 player in K-12 education as the #1 cross-media player in Finland and with a business that is built around sustainability. With that, I would like to conclude I want to thank you, as our shareholders, very much for the attention at this moment, but specifically for your support in the past year. So with that, Madam Chair, I'd like to hand back to you.

Thank you very much, Susan, for the presentation. And now I'm opening for the Q&A.

Any questions regarding the CEO's review over there. Can I get the microphone there. And please state your name and the number of your ballot.

[indiscernible] ballot #111. So it became quite clear what the development of IS was compared to the paper sales. But what does it look like with Helsingin Sanomat and Aamulehti newspapers compared to the digital paper. And do you invest in the paper products at all? Or is it just going to die out?

Sorry, I need translation because it might translate over the...

So the questionnaire was thanking for the presentation regarding Ilta-Sanomat and asking about the other key newspapers, Helsingin Sanomat and Aamulehti and whether there is still a process on that and how the paper news see or look right now.

Thank you very much. Summarizing the full development, of course, of Helsingin Sanomat and Aamulehti would be taking quite a presentation. But the digital development of both is going quite strong. While the newspaper is also continuing its strength. So what you clearly see and the one change that has been made during the year that I think is quite interesting is that we have opened up digital application for everyone who has also print. Therefore, you see that, of course, we're presenting more and more of digital usage and seeing more and more availability of digital, but the print usage is, of course, still very strong, certainly also in our regional titles, but also with Helsingin Sanomat. And I'm inviting otherwise, my colleagues, if there are any sort of further comments that you would like to highlight?

Okay. What I could do here in between, there is a follow-up also from the chats regarding the same one. So when will the printed newspaper fade away and be completely replaced by digital. And already now daily delivery of newspapers has discontinued or is about to discontinue? [Foreign Language] So could you please combine your answers to this.

Yes, of course, shareholders, as the CEO already stated, the digital growth did continue very nicely. It has in Helsingin Sanomat. Also, we have had 12% growth, which was more than the average in the market. We had a 5-year growth pattern in the number of subscriptions, and it evened out to 440,000 last year. And as it was already stated, virtually all subscriptions include some digital component and the subscriptions to digital platforms continued strongly related to the printed newspapers, you can see that it's clear that we've had a Sunday paper that the delivery is going to end at some point, but this also has an impact on Helsingin Sanomat, if they're going to discontinue the delivery in the provinces at some point also Helsingin Sanomat will have it -- see it coming at some point. And we're going to make a personal offer regarding this to all our subscribers. And I'm sure that we have a good product for everyone in the future that they could continue with. And with the future of the printed newspaper, I have a very positive view on that. And the number of subscriptions is going to decrease globally. And with the newspapers in the provinces. This has been a clear development in the recent past. But we have no plans in cutting down the publishing of printed newspapers, more likely, it's going to be a more exclusive product in the future, focusing on the pleasure of reading the newspaper. And for the subscriber, it is just positive that somebody has professionally curated at doses of news and reported on that. You can spend quality time with that product. I'm sure there will be a future for that for a long time still and I am sure Helsingin Sanomat and many other media products will remain for a long time.

Thank you [indiscernible] for your response. Any other questions? First, over there, please.

My name is [indiscernible], and the number is 63. Artificial intelligence is coming towards us from all corners, both to our working environment to the media. So to occur to me in a big media house where you utilize it, how do you perform fact checking. And when you have big IBM and hardware companies like that, they have the servers. There are such circles that utilize artificial intelligence strongly. So what you do in practice? Will we have a partially random fake news generator with the artificial intelligence that you can create classic images and articles such as ready-made article?

[Foreign Language] Yes, I think that the -- asking the question is almost already answering him. Artificial intelligence is, of course, an important tool that we use not only in news, but also in learning. But it is, of course, never without guidance and without having these algorithms very clearly checked upfront. So I think the whole purpose of our media is to make sure that, that fake news that you're indicating cannot be put under our brands. So the journalistic effort of that will be central. But at the same time, where the tools are helpful in efficiencies. I think we should also not be wary of using it as a part of the research that can be done. But then in the end, we need to stand behind the quality of the news that is reported. So yes, as a tool, but no as an independent end product.

[Foreign Language] And now there is another one, just please wait for the microphone.

[indiscernible] ballot #25. I have been following the media and the news channels. And I have to say that this company is the leading one in the news market and I think you should understand better the future developments than what I have seen so far. It can't be true that an operator that collects news from the media didn't know that the war is about to start when the President already knew about it in December. And another thing that you failed was that you couldn't correct your investment decisions, although you knew that this kind of a situation was coming up. And I think the management should make it clear to itself whether they actually succeeded or not. I don't think the management succeeded in this.

Yes. Thank you for your comment.

[Foreign Language] Any other questions, comments? Just wait for the microphone, please.

I'm [indiscernible]. Ballot #98. I have been thinking about a good way to promote the environmental conservation. But there was an article in Helsingin Sanomat, there was a clear error there, and I wrote to the journalist about it, but the response only contained the Wikipedia extract and it actually wasn't the same as what he or she had written in the paper. So the journalist knew that he had written rubbish. And then I noticed the next time that the editor had actually made it into a quotation and stated that it was a statement by an expert. So this is clearly not the correct truth. Can the report is just write anything they like? And could the Chairman of the Board has answered this kind of an ethical question.

[Foreign Language] Pekka Ala-Pietila, the Chairman of the Board, will answer this question.

[Interpreted] This is an important question in many ways. Concerning the media, the quality of journalism, the way in which we make a newspaper covers many perspectives and brings them to the readers. The newspaper has its own standpoint, starting from the ethos of the newspaper that was created by the founders of the newspaper that we still represent, and that is always visible in the editors letter. But we want to emphasize facts and bring out important viewpoints, but we leave it for the reader to decide what the final outcome is in many cases. When we think about the number of articles, the different situations in which these articles are written, we can't always succeed from the readers perspective in all aspects. And I think this will stay like that in the future. But what is essential here is the quality of journalism. The willingness to write from various perspectives and the willingness to write in a way with the newspaper leaves the decision-making for the reader, just offering various perspectives. That is the core of the way we bring news and articles forward in Helsingin Sanomat.

Thank you. And next, the microphone here in the center.

[Foreign Language] [Interpreted] Thank you, Chairperson, [indiscernible], voting ticket 61. Interesting to hear, and it's -- I'm very excited to be along with the learning business. But now I'd like to make a question to Chairman of the Board. I make it in Finnish. In fact, last year wasn't as catastrophic as I would have imagined. But as I heard about the hybrid bond issue, I thought that now Sanoma has perhaps hit a very strange hole as the company has been going around in [indiscernible] and now it has its head above the surface of the water. I'd like to hear some justifications for why the company decides to provide 8% of yield to outsiders from our funds and from our equity.

[Interpreted] When we think of our financial situation, we think of future investments and how we take good care of our opportunities to invest and to react, and operate under such circumstances where we may face some opportunities to build our future and make investments that will help us build our future. So we have to make sure that then we have a certain cash -- like a [ war ] cash available. And in such a situation, as we've considered this was important. It was also justified. We also considered the price. So therefore, that is the percentage mentioned by the person who asked the question. But at the same time, we need to consider things on a long-term basis and make sure that we are able to react and operate. And that headroom for us to be able to be competitive and operate strategically means that we also have to pay a certain amount, but to be able to tap the opportunities that may come across that was justified decision from the point of the Board.

Then there was another hand raised. So I'll give you the floor for another question.

Perhaps I could then require that when next time the Board ends up with such a situation, it would also send an application for funding to myself as well because I'd be also happy to participate in future investments, using my own funds.

Thank you. Any other questions? At the back, please?

[Interpreted] [indiscernible] voting ticket 119. The fairly different business areas when you think of the learning and also the media, I'd like to ask what are the synergy benefits to Sanoma of these two businesses? And what are the future perspectives? Are you able to make use of synergies in future to both in media and also in the Learning business?

Yes, there are definitely synergies in between the two businesses. When we think about the shared overhead, but also when -- and support functions, but also when we think about joint contract, for example, on procurement. So when we contract hosting, when we contract for paper, we do that on a group level and there with have the full EUR 1.3 billion in revenues that we can bring to the table in order to get better rates. So we do see it is not massive synergies, but we do see significant synergies that make us quite glad to have these two businesses together. The typical, let's say, complexities of having two businesses with slightly different dynamics, we try to avoid by having very separate management for both the teams so there is no confusion in how to run the business, how to follow its own key performance indicators and its own dynamics. So we try to avoid the mix and the potential dilution of attention by having two teams, but we do benefit from synergies in contracting and in support functions.

[Interpreted] Any other questions? Anybody wishing to speak? I could take one from the chat now. And I also apologize that I'm using my mobile, but that is where I get the questions. What is the competitiveness of the Channel 4 and Ruutu. Ruutu is a question via the chat.

Yes. I think Nelonen as a free-to-air TV is one of the leading TV groups in Finland. So competitive from that aspect. Certainly, on the entertainment side, of course, when it comes to, for example, premium sports or news, those are areas where Nelonen is not active in. So that's where it does not compete. If you look at Ruutu, there, I would say, above-average competitiveness showing an increase in a number of subscribers, very attractive proposition, clearly. Also with the changes in productization and pricing that were implemented last year. So that has grown the number of subscribers to over 300,000, which are considered for a local play VOD subscriber base quite significant in the market, the size of Finland. When competing, of course, against sizable international competitors like Netflix and Disney+, but also with a very strong local competitors in Hulu. So I would say, a competitive proposition, but in a difficult and rapidly changing markets.

[Interpreted] Any other questions? Anybody wishing to take the floor? And I'd also like to make sure that we have no chat requests. So I think now it is time to thank Susan Duinhoven. However, we are still under the same item. We have covered the CEO's review and the financial statements, but we still have to go through auditor reports. So I want to ask the company's auditor to present the auditor's report to the Annual General Meeting. I'll give the floor to Authorized Public Accountant, Samuli Perälä, the auditor of Sanoma plc.

[Interpreted] Yes, you can see the slide in front of you. I believe we can take the next slide. Yes. Thank you, Chair. Shareholders, it's nice to see you all under normal circumstances after the years with COVID. My name is Samuli Perälä, and I represent PricewaterhouseCoopers that has acted as the auditor for Sanoma in 2022. I shall next present Sanoma's auditor's report. As usual, we have audited the parent company and significant subsidiaries, and the Pearson acquisition in Italy and in Germany was also considered in this scope of our audit. And this acquisition took part in the middle of the financial period. So we had to combine those details into the group financial statements as well as into the balance sheet for the full year. As of with the acquisition of Pearson, the goodwill increased by EUR 55 million. And at the end of the period, this section covered somewhat over 60% of the balance sheet of the company. So it seems to be a self-evident target for the audit and valuation of goodwill, other key audit matters where the evaluation of prepublication rights included in intangible assets and the revenue recognition. And in the parent company, audit, key audit matters covered the valuation of interests in group companies and receivables from group companies and is consistent with the additional report to the Audit Committee.

Any questions to the auditor? Any requests for the floor? Here in the front.

[Interpreted] Thank you, Chair, ballot #25. My name is [indiscernible]. I just noted down that in the financial statements, we don't hear anymore your statements of the future of the company with the changes going on.

Future assessment is included in the general audit principles and the Board and the CEO take a stand on how well the company can comply with its obligations in the next 12 months. Also, when we cover the financial risks, we also cover any future related risks and uncertainties, and they are appropriately published in the auditor's report and in the annual report.

Thank you for the question. Another question in the back there.

[indiscernible] 111. I would like to, out of interest, follow what the audit things cost? I'm not saying it's too high, but I'm just drawing some statistics when it says here that the invoice is approved. So what was it for you last time?

You can find this information in the financial statements. The auditor's fee was EUR 1.4 million for the whole group.

[Interpreted] Any other questions, comments, requests for the floor? Then we want to thank APA, Samuli Perälä. And at this point, I shall state that now also the auditor's report has been presented as well as the Board of Directors report and the financial statements. They have all been presented to the AGM. Any requests for the floor? Any comments? Apparently not, nor through the chat. So thank you for a very active discussion and questions. We are now ready to move on to item 7, adoption of the financial statement. In the opinion section of the report, the auditors have recommended the adoption of the financial statements. I take it that the financial statements be adopted in the form proposed, thus adopted the financial statements for the financial period 2022. We move on to item 8, resolution on the use of the profit shown on the balance sheet and the payment of dividend. The Board's proposal on the use of profit can be viewed on the slide here, please. And the proposal covers three installments of the dividend and the CEO already covered this in her review. There have been no essential changes in the financial position of the company since the financial period ended the liquidity of the company is solid. And according to the Board's view, the proposed payment of dividend does not compromise the company's solvency. The dividend is paid to shareholders in three installments. And before we move on, we have one advanced question from shareholders and the Chairman of the Board will respond to this question. And the question is as follows, the proposal for dividends by the Board of Directors of Sanoma EUR 0.37 was surprisingly weak in analysts' opinion. And as a consequence, the value of the share dropped sharply, wouldn't it have been better to propose, say, a EUR 0.40 or even EUR 0.45 and there would still have been a buffer. At the same time, the valuation of the share would have been stronger. Now it seems that the company failed to fulfill the expectations of both analysts and shareholders. Furthermore, the procedure to divide the dividend payout, first to two, now to three parts, provides the company with additional assets compared to paying the dividend in one go, thanks to unpaid dividends. So now the Chairman of the Board will answer to this question. I will then give room for other questions.

[Interpreted] And perhaps I can start by sharing -- shedding light on the background of the policy with dividend payments as I'm sure you already are familiar with it. It is the objective of the company to pay a growing dividend, 40% to 60% of the annual cash flow of the company, but we deduct some investments from it. The proposal for the payment of dividends was carefully considered by the Board of Directors and made a proposal corresponding to 96%, so significantly more than 40% to 60% of the cash flow of the company. And in 2021, that level was 55%, just to remind you. So this proportion of the dividend to the free cash flow, it deviates in a positive manner from our principal, but the Board considers it justified since the cash -- free cash flow for 2022 already included significant investments into development of the company, the digital platforms that were mentioned. The modernization of office premises and integration of the acquisitions. What the Board did not consider as well justified was to go over 100% because that would have meant that we borrow money that we pay out through dividends to the shareholders. In our opinion, this proposal strikes a balance between two things that the Board always has to keep in mind. On one hand, using the profit to dividends. On the other hand, to continuous growth investments and striking this balance is important for us to be able to build the future while making sure that the dividend encourages for owning shares in our company. And when these proposals are made, the company has -- and the Board has to take into consideration the macroeconomic situation. We also consider our equity structure, the future investment plans and needs. And of course, the previous year's cash flow. As to the part of the question concerning the exchange rate of the stock exchange for the company's shares, I'm sure there are other factors than just the dividend proposal affecting it, for example, the outlook for 2023. According to which we are expecting as our CEO, Susan Duinhoven explained, there is going to be a small recession in our operating countries. And this is, of course, visible in our outlook. With regard to the dividend payments, there has been a clear transition in our business to be driven by the Learning business, and that affects our cash flows. So therefore, the payout in three installments, better corresponds to the company's cash flow cycle and therefore, offers us a lower costs tied to the payments. And I want to repeat that the cash flow is strongly negative in the first half of the year and will turn positive in the second half.

Thank you, Chairman of the Board. Any other comments or questions regarding this presentation? Hence, I take it that the proposal for the distribution of profit and the time of dividend payment by the Board of Directors will be adopted. Hence adopted, we move on to item 9. Resolution on the discharge of the members of the Board and the President and CEO from liability. And you can hear the proposal here during the financial period 2022, the Board consisted of the following members for the entire financial year: Pekka Ala-Pietilä, Chairperson; Nils Ittonen, Vice Chair; Julian Drinkall, Rolf Grisebach, Anna Herlin, Mika Ihamuotila; Denise Koopmans; Sebastian Langenskiöld; Rafaela Seppälä as members. And as President and CEO, Susan Duinhoven. In the report, auditors have supported the discharge. And now I'd like to know whether anybody would like to take the floor and speak. If not, we can resolve the discharge the members of the Board and CEO from liability for the financial year 2022. Item 10, adoption of the remuneration report of the governing bodies. The next two items concern the remuneration of the governing bodies. And the remuneration report for 2022 was adopted in the last Annual General Meeting and that will be handled now the proposal for a new remuneration report has been published on the 6th of March, and shareholders have received a copy. The Board of Directors proposes that the Annual General Meeting adopts the remuneration report as proposed. The decision is advisory. And now I'd like to invite the Chair of the Human Resources Committee, Mr. Julian Drinkall, to present the key elements of the remuneration report and also amendments proposed to the remuneration policy, and then we'll get back to handle the item 10. So Julian Drinkall will now go through the key elements of the remuneration report and also amendments proposed to the remuneration policy. Mr. Drinkall. Welcome.

Dear Sanoma shareholders, my name is Julian Drinkall, and I am the Chair of Sanoma's HR Committee, the Personnel Committee. I'd like to present to you the Board's proposal for the updating of Sanoma's remuneration policy. And in addition, in this presentation, I will share the key points relating to the remuneration of President and CEO, Susan Duinhoven in 2022. Our remuneration is presented in further detail in the remuneration report. The update to the remuneration policy includes the Board's proposal to change the performance in Sanoma's long-term share-based performance share plans. Specifically, the proposal is to vary the period away from last year's proposal of 2 years to a new proposal of 1 to 3 years. We are proposing this change because while we wish to move to a longer-term performance horizon, recent global economic and political trends and uncertainties necessitate a more flexible approach to rapidly changing context. We proposed this change in order to optimize the long-term commitment of all of our key employees whilst we're operating in this more volatile operating environment. Simultaneously, we wish to support the company's continuing transformation and long-term growth strategy. The performance measures themselves remain exactly the same, namely adjusted free cash flow and operational EPS. Annually, the Board would decide the length of the performance period and the criteria for the KPIs for each performance share plan. For the performance share plan 2023 to 2025, the performance period proposed is 1 year, 2023, and it is followed by a vesting period of 2 years. This vesting period, again, remains completely unchanged. And this means that the potential share awards will be paid in spring of 2026. In this updated remuneration policy, Sanoma's remuneration principles remain completely unchanged. According to these principles, the remuneration should: Support the business strategy; be based on performance; be competitive; encouraged share ownership; and be fair, transparent and simple in design. In 2022, the CEO's remuneration was in line with these principles and the remuneration policy. For 2022, 84% of the remuneration paid to the CEO, Susan Duinhoven, was variable and based on performance. 85% of the variable remuneration was share-based and based on Sanoma's performance in 2019. At the end of December 2019 -- 2022, apologies, Susan Duinhoven held approximately 578,000 Sanoma shares. Next, I would like to introduce the remuneration earned by the CEO based on -- specifically on Sanoma's 2022 performance. During the year, there were indeed temporary constraints due to high inflation in Sanoma's financial performance, impacting both the operational EBIT and adjusted free cash flow and resulting in below target level performance. For operational EBIT, the performance achieved was 54% and for adjusted free cash flow, 69%, both in the range of 50% to 150%. On the sustainability targets, the performance in employee engagement was at the target level and in data and privacy above the target level being 130%. All in all, this leads to a 70% short-term incentive outcome for the CEO for 2022, and the earned STI reward is paid now in April 2023. For short-term incentives in 2023, the target structure continues to be exactly the same as in 2022, with financial targets making up 80% and sustainability targets related to employee engagement and data and privacy, 20% of the incentive at the target level. In the long-term share-based incentives, the performance for the 2022 to 2024 performance share plan launched a year ago is two years, 2022 to 2023. The performance criteria was set at the beginning of the year 2022 and the performance outcome for this 2-year performance period will be determined at the end of 2023. The potentially earned share-based LTI reward will be paid in spring 2025 after a 1-year vesting period. 2022 was another year of solid underlying performance for Sanoma despite being very different from what we had expected when it started. Driven by the acquisition in Italy and Germany, it was also a year of continued growth. On behalf of the HR Committee, I would like to warmly thank the employees and management for their commitment and hard work during the past challenging year. Together, we continue being committed to implementing further our strategy in 2023. I would also like to thank you, our shareholders, for your continued support. Thank you very much.

[Interpreted] So we'll go back to the Item 10. Adoption of the remuneration report of the government bodies. Any questions? Any comments? If not -- yes, at the back, apologies. The light was shining on my eyes. You'll get the microphone, just a second.

[indiscernible] voting ticket #98. If I understood correctly, 16% of base salary. And there's the guidance by the government of Finland that the basic salary would be at its most 60%. I think the person did say 60% instead of 16%. [ Jorma Ollila ] said in his time, if the remuneration is very high, that is also destructive for the company. What do you think of that?

Might I ask for that to repeat it because my translation was not working right at the beginning.

Okay. So the first question was that if the question -- the presentation was understood correctly, 16% of the remuneration was formed of base salary. And the questionnaire was referring to the state of Finland applying a policy whereby a maximum of 50% could be -- not related to performance and asked you to comment on the policy of the state of Finland which is not a shareholder of Sanoma. And then the second question was in relation or comments in relation to [ Jorma Ollila ] having -- or quoting [ Jorma Ollila ] saying that too large remuneration is not -- is detrimental to the company asking for a comment on that.

Let me take the second question first. I think the principles that Sanoma has been operating under supporting the business strategy being based on performance, being competitive, encouraging share going to be fair transmit. Those are principles that we've adopted throughout and I think are very much agreed. And performance is the key attribute with regard to our policy. With regards to the first question, I'm not sure I fully understood it, but 16% is the fixed component of the CEO's salary. 16%, yes.

Any further questions? In that case, we adopt the remuneration report, and this is an advisory decision by the Annual General Meeting according to the Company's Act. Item 11, adoption of the remuneration policy of the governing bodies. And we already heard about the amendments, the previous time. This was resolved in the previous Annual General Meeting in 2022, and the remuneration policy shall be presented at least every 4 years and always an essential amendments are made to it and the proposal has been presented. Anybody wishing to take the floor ask any questions or comments? In case no, we adopt the amended remuneration policy of the governing bodies as presented, and this decision is advisory according to the Company's Act as well. Item 12. Now we start the remuneration of the members of the Board of Directors, Board committees and the Shareholders' Nomination Committee following with resolution of the number of the members of the Board of Directors and elections. And as the Chairman of the Board said in his opening address, shareholders Nomination Committee has -- the first time, given its proposal as it was nominated for last year, and I'd like to invite Juhani Mäkinen to present the proposals by the shareholders, nomination committee presenting all proposals at one go, and then we'll handle item by item. So Juhani Mäkinen.

[Interpreted] Thank you, Chair. Dear shareholders, I have had the pleasure to chair the Shareholders' Nomination Committee during this period on this term of office. And as other members, we have had Antti Herlin, Robin Langenskiöld, and Rafaela Seppälä. Our proposal has been published as such, but I'll repeat it here. With regards to remuneration, we propose that the month remuneration of the Board members remain unchanged, meaning that the Chair of the Board is paid EUR 12,000; Vice Chair EUR 7,000; and board members, EUR 6,000 per month. Further, the Nomination Committee proposes that the meeting fees remain unchanged for the Board of Directors. In other words, those Board members who have their residents outside of Finland, will receive EUR 1,000 per Board meeting where they have been present. With regards to Board members who reside in Finland are not paid a meeting fee for Board meetings. Further, chairpersons of Board committees, we proposed be paid EUR 3,500 per committee meeting where they participated. And for committee members who reside outside of Finland, be paid EUR 2,500 per committee meeting, where they were present of EUR 1,500 if they were participated per committee meeting. Meaning they were participating, but not physically present. These were the proposals. Further, the Shareholders' Nomination Committee proposes for the number of members that it be set, the current, that is 9 members and the Nomination Committee proposes that as members of the Board of Directors, we reelect Pekka Ala-Pietilä; Julian Drinkall; Rolf Grisebach; Anna Herlin; Mika Ihamuotila; Nils Ittonen; Denise Koopmans; and Sebastian Langenskiöld; and as a new member Eugenie van Wiechen. The term of all Board members ends at the end of the Annual General Meeting 2024. Further, we elect as Chairman of the Board Pekka Ala-Pietilä and as Vice Chair Nils Ittonen. And we can still note that whilst discussing the composition we have considered the composition as one entity, and therefore, we'd also like to see it being handled as an entity as such. And I have understood that Eugenie van Wiechen will give her presentation in a digital format.

We will take the video presentation of the new Board member candidates when we handle that particular agenda item, we'll get back to that then. Thank you for your proposal. The Chair of the Shareholders' Nomination Committee. Could I get the slides back with regards to the Item 12 and the proposed remuneration. I'd like to complete and also it has been proposed that the members of the shareholders Nomination Committee, we also paid remuneration corresponding to the previous proposals for members. Any questions? Any comments? I'm trying to carefully look that I will not ignore anybody. No, so we can adopt the remuneration as proposed. And then Item 13, the resolution of the number of the members. The proposal is 9 members. Any questions, any comments? No questions, no comments. We adopt the number as proposed to be set as 9. Item 14, election of the Chairperson, Vice Chairperson and the members of the Board of Directors. We already got the proposal with regards to the composition and grounds for it. And now it is the time to see the video presentation of Eugenie van Wiechen. [Presentation]

So now we have also presented Item 14. Any comments or questions under Item 14? So we shall now adopt the election of the Chair, the Vice Chair and the members of the Board of Directors as proposed. We have two items concerning the audit. We shall first make a resolution on the remuneration of the auditor and then on the election of auditor. I shall now call the Chairperson of the Audit Committee, Denise Koopmans. She will present the Board's proposal for the remuneration and election of the auditor and we shall proceed discussing them after that. Those regarding remuneration and election of auditor. Ms. Koopmans, welcome.

Thank you, Ms. Chair. Good afternoon. Dear shareholders. My name is Denise Koopmans, and I'm the Chair of the Sanoma Audit Committee. I would like to present to you the Board's proposal for the election of the company's auditor and their remuneration as prepared by the Audit Committee. Regarding the auditor remuneration, the Board proposes that as in previous years, the auditor will be paid in accordance with the invoice as approved by the company. During 2022, fees paid to the auditor for audit services were EUR 1.4 million and fees paid for non-audit services were EUR 100,000. Fees paid for audit services increased slightly in line with Sanoma's recent acquisitions, as you've heard before, while fees paid for nonaudit services remained stable in comparison with last year. Regarding the selection of the auditor, the Board proposes that PricewaterhouseCoopers will continue as the company's auditor. According to PwC, Samuli Perälä, we have heard before, will continue as the lead auditor with principal responsibility. PwC and Samuli Perälä have acted as the group's auditor since the AGM of 2017. I thank you for your attention and for your continued support.

[Interpreted] Any comments, questions on the remuneration for the auditor? Hence, we have adopted the remuneration of the -- on the remuneration of the auditor, and we move on to Item 16. Any comments, questions regarding election of auditor? Hence, we can adopt and confirm the election of auditor. The next two items are traditional items for Sanoma authorizing the Board of Directors in two ways under 17, we have the authorization of the Board of Directors to decide on issuance of shares option rights and other special rights entitling to shares corresponds to the [ insights ] to the authorization given in the Annual General Meeting of 2022. So this is 16 million, corresponding to about 9.8% of all the shares in the company, and this should be valid until 2026 and will terminate the -- sorry, 2024, and will replace that previous authorization. There are no comments or questions and hence, we have adopted the authorization. Then under 18 resolution authorizing the Board of Directors decide on issuance of shares, option rights and other special rights. So the previous one on the repurchase of the company's owned shares and now the issuance of shares, option rights and other special rights. And this has to do with no more than 16 million new shares and an authorization of the conveyance of a maximum of 21 million treasury shares held by the company in one or several installments, still this corresponds to approximately 9.8% of all shares of the company. And this authorization is proposed to be valid until the 30th of June 2024, and it would replace the authorization given in the previous Annual General Meeting, and it would grant the authorization to the Board regarding this issuance. Any questions or comments on this authorization? There's a question here in the front row.

[Interpreted] 25, ballot number. My question is does this affect the company's finances? And if so, to what direction?

[Interpreted] The question on the impact of the authorization of share issuance on the company's finance, of course, this will involve that the Board can use its discretion in authorized or in any issuance of shares or option rights, other special rights. And this has been regulated in the Companies Act so that they have to be spaces for taking such measures and they have been described in that Act. So the Board has to first decide whether they have justified reason to use such rights, and they also have to be prepared to justify their decisions. So the framework within which the authorization can be utilized comes from the limited liability Company's Act and the Board would then take decisions based on that premise. Any other questions, comments? So hence, we adopt this authorization as proposed. And now we have one more item, which is not a traditional one, but a very typical one in companies in this season. The Board's proposal on amending the Articles of Association. And as it was already stated, we haven't met for 4 years due to the restrictions regarding the pandemic and the Board of Directors in Sanoma has also proposed that the general meeting would amend the Articles of Association so that it would enable arranging a general meeting of shareholders without a meeting venue as the so-called full remote meeting and that the notice could be published only on the company's website. Furthermore, Articles 11 and 12 will be abolished as the substantive content will be incorporated into the revised Article 10. You can also view these proposed amendments on the screen. Any comments or questions regarding this item? Yes, over there.

[indiscernible] ballot number 25. I object to this proposal. I believe it is sufficient that your opposition will be recorded in the minutes, right?

Very good, thus recorded in the minutes. And in this connection, I shall say that any opposing votes that came through the advanced voting are recorded, depend we have the required majority for this proposal. Any other comments, questions, requests for the floor on this item? Hence, we shall adopt the proposed amendment to the Articles of Association. Now we have come to item 20. So I state that the decisions made in this Annual General Meeting were supported by all shareholders present unless otherwise recorded in the minutes. And you can see the advanced votes. The minutes of this Annual General Meeting will be available for shareholders scrutiny on the company website no later than the 3rd of May at the latest and it is now 16:20. I will close this meeting and wish you a nice spring. And we'll thank you for an active participation in the general meeting. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]